UNCLAS DHAKA 003795

SIPDIS

E.O. 12958: DECL: N/A
TAGS: ETRD BG IN
SUBJECT: Cordial Bangladesh-India Trade Talks Yield Few Results


1. Summary: India and Bangladesh held trade talks August 1-
2 in Dhaka. Although both sides described the meeting as
cordial, and some minor issues were addressed, there were no
major breakthroughs. Both parties agreed to continue
efforts to resolve pending issues. End summary.


2. The India-Bangladesh Joint Working Group on Trade
Issues held its third meeting on August 1-2 in Dhaka. Mr.
Ilias Ahmed, Joint Secretary of the Ministry of Commerce,
led the Bangladesh delegation, while his counterpart, Mr.
MVPC Shahstry, led the Indian delegation. The meeting
focused on non-tariff and para-tariff barriers identified by
each side and discussed mechanisms to resolve some of them.
The working group's next meeting is set for February 2006 in
New Delhi.


3. An aide to Ahmed told Embassy Econ/Specialist the sides
reached agreement on three issues:

-- India agreed to establish six bank branches in its
northeastern provinces to facilitate duty and tax payments
on cross-boarder transactions.
-- India agreed to improve the infrastructure of Indian
land ports. Bangladesh claims poor infrastructure imposes
unreasonable delays on imports from Bangladesh.
-- Bangladesh agreed to permit Indian experts to visit
Dhaka in October 2005 to validate the standards and
capacities of several Bangladeshi laboratories, in the
expectation India would permit the import of Bangladeshi
goods certified to meet standards by these laboratories.


4. Mutual recognition of standards and certifications is a
continuing issue between the two countries. Bangladeshi
exports of cement, condensed milk, electrical appliances,
dry cell batteries and mineral water to India must first be
registered with and certified by the Bureau of Indian
Standards. Bangladeshi exports of poultry and dairy
products also suffer from India's mandatory sanitary import
permit requirements. Despite Indian concessions, Bangladesh
did not agree to eliminate the 'Khamarbari' certificate
required of Indian potato exporters. Bangladesh did not
agree to Indian demands to eliminate a five percent subsidy
for local yarn manufactures.


5. Comment: Bangladesh's sizable trade deficit with India
is a continuing source of friction for Bangladesh, but
provides little incentive for India to remove barriers in
exchange for greater access to Bangladesh. During FY 2004
(July -June) Indian exports to Bangladesh were $1.6 billion
while Bangladesh exports during the same period were a mere
$89 million. This week's limited progress can perhaps best
be viewed in the context of upcoming political visits
between the two countries. End comment.
Bangladesh did not comment on India's claim on payment
procrastination by some of the Bangladeshi banks.

CHAMMAS